Alert issued on budget, timing problems in construction

AS construction projects are getting bigger and more complex, many South African companies are struggling to keep up and fewer than 33% of work is completed on time and according to budgets.

This is revealed in a new report – titled Global Construction Project Owner’s Survey: Climbing the Curve – released by auditing firm KPMG.

It suggests that the problems facing the industry are compounded by skills shortages, resulting in foreign- owned companies entering the fray. The report also highlights how more than half of construction project owners have experienced one or more under-performing projects in the previous year, despite confidence in planning and controls.

It also states that only 31% of construction projects came within 10% budget, and just 25% within 10% of original deadlines in the past three years.

Jeff Shaw, director of infrastructure and major projects at KPMG, said the improve- ments by owners in planning, project controls and risk management had been significant.

But, he said, more work was needed to reduce the number of project failures and bring more projects in on-time and on-budget.

“The industry globally has not yet reached a stage of maturity where there is sufficient predictability of project outcomes and the African major projects industry is clearly no different.

“There needs to be a greater emphasis on planning and prioritising,” he said.

KPMG’s survey shows that owners of major capital projects are implementing more mature planning and approval processes, with 84% reporting that their company screens projects using both financial and risk analysis.

The survey also shows that 74% of firms require formal project delivery and contract strategy analysis, prior to authorisation.

Project owners surveyed also expressed confidence in their approach to risk, controls and governance.

Of those surveyed, 64% believe their management controls are either “optimised” or “monitored”, and almost 75% feel comfortable with the accuracy and timelines of project reports.

More than half also indicate they are either “satisfied” or “mostly satisfied” with the returns on investment in project management tools and training.

Shaw urged the development of skills of those managing projects, while, overall, there was a critical need for skilled talent.